Prices for online shopping at popular retailers like Shein and Temu are set to rise due to a recent change in U.S. trade policy. President Donald Trump has closed a duty-free loophole that previously allowed low-value packages to enter the country without import taxes. This change is expected to impact many American consumers who have relied on these retailers for affordable goods.
The loophole, known as the "de minimis" exemption, allowed packages worth less than $800 to be shipped to the U.S. without incurring duties or taxes. Supporters of this rule argued that it simplified customs procedures and made shopping easier. However, both Trump and former President Joe Biden expressed concerns that it hurt American businesses and facilitated the smuggling of illegal goods, including dangerous drugs.
With the closure of this loophole, packages from China and Hong Kong will now face a hefty tax rate of 120% or a flat fee that starts at $100 and will increase to $200 by June. This means that even before the new taxes take effect, consumers have already started to see price increases from retailers like Shein and Temu, which cited rising operating costs due to changes in global trade rules.
In February, Trump briefly suspended the de minimis exemption but paused the suspension after feedback from customs inspectors and delivery services. The recent executive order aimed to combat the illegal importation of synthetic opioids, like fentanyl, which have caused thousands of deaths in the U.S. The order highlighted that many Chinese shippers have used the loophole to hide illicit substances in low-value packages.
The impact of this change is significant. The number of packages entering the U.S. under the de minimis exemption surged from about 140 million a decade ago to over one billion last year. This increase has strained U.S. border authorities, making it harder for them to monitor illegal shipments.
Experts warn that closing the loophole may not effectively address the drug smuggling issue and could create additional work for customs officials, who are already stretched thin. Critics argue that this move could shift focus away from the southern border, where most illegal drugs enter the country.
As U.S. consumers brace for higher prices, similar changes are happening in the UK and the European Union, where reviews of low-value imports are underway. This suggests that shoppers in those regions might also soon feel the pinch from rising costs.